SOURCE: LSB Corporation

October 20, 2010 16:02 ET

LSB Corporation Announces Third Quarter 2010 Financial Results of $1.1 Million, Declares Dividend of $0.09 per Share

NORTH ANDOVER, MA--(Marketwire - October 20, 2010) - LSB Corporation (NASDAQ: LSBX) (the "Company") today announced third quarter 2010 net income of $1.1 million, or $0.25 per diluted common share, as compared to $1.3 million, or $0.30 per diluted common share, for the third quarter of 2009. Net income for the nine months ended September 30, 2010, totaled $4.3 million, or $0.95 per diluted share versus $3.0 million, or $0.66 per diluted share, for the same period of 2009. These quarterly results correspond to a return on average assets and average equity of 0.57% and 7.05% in the third quarter of 2010, respectively, as compared to 0.78% and 8.31% in the third quarter of 2009, respectively. The 2010 year-to-date results correspond to a return on average assets and average equity of 0.71% and 9.14%, respectively, as compared to 0.61% and 6.55% in 2009, respectively. On July 15, 2010, the Company entered into an Agreement and Plan of Merger with People's United Financial, Inc. (NASDAQ: PBCT) ("People's United") providing for People's United to acquire the Company in an all-cash transaction valued at $96 million, or $21.00 per share.

President and CEO Gerald T. Mulligan stated, "I am pleased to report earnings of $0.25 per diluted share for the third quarter of 2010. This is after transaction costs of $475,000 or $0.10 per share related to our pending acquisition by People's United. Despite the challenges in the economy, we have been able to sustain our strong operating results and achieved core deposit growth of 4.1% since December 31, 2009.

"We are excited by the opportunities presented by our pending merger with People's United. We look forward to offering our retail customers an expanded array of products and services and our commercial customers larger loan limits and other ancillary products.

"Our special shareholders meeting will be held on Wednesday, October 27, 2010, and we are optimistic that our shareholders will approve our pending acquisition by People's United. After receipt of shareholder approval, the final hurdle to the completion of the transaction is receipt of regulatory approvals which we expect will be forthcoming this quarter. Investors are encouraged to read carefully our definitive proxy statement filed with the Securities and Exchange Commission on September 15, 2010, and all subsequently filed proxy solicitation materials.

"I am also pleased to announce the opening in early August of our new branch at 9 Jackson Street in Methuen, MA. The new location greatly enhances the customer experience with additional services and nearly doubles the space of our old location. We have seen an increase in accounts and overall activity and a positive response in the community."

At September 30, 2010, assets totaled $780.4 million, a decrease of $36.2 million or 4.4% from December 31, 2009. The decline in total assets was a measured effort to reduce wholesale funding and brokered term deposits. The Company experienced modest loan growth of $2.6 million or 0.5% from December 31, 2009. This loan growth was funded by $65.0 million of maturities and regular amortization of collateralized mortgage obligations and mortgage-backed securities and sales of investments of $40.2 million.

At September 30, 2010, deposits totaled $475.1 million, a decrease of $17.7 million from December 31, 2009. River Bank's focus on attracting and retaining core deposits produced favorable results in the first nine months of 2010. Core deposits, comprised of savings, money market, NOW and demand deposit accounts, increased by $10.3 million from December 31, 2009. Savings, NOW and demand deposit accounts increased $10.3 million, $4.3 million and $4.1 million, respectively, from December 31, 2009. This growth was partially offset by a decrease in money market accounts of $8.5 million from December 31, 2009. Certificates of deposit decreased $27.9 million from December 31, 2009, including matured brokered certificates of deposit of $14.4 million. Total borrowed funds decreased by $23.5 million or 9.1% from December 31, 2009 and totaled $235.6 million at September 30, 2010. During the first nine months of 2010, $28.0 million in long-term advances matured and the Company prepaid $5.0 million in long-term advances with a penalty of $149,000.

Gains on sales of investments totaled $688,000 and $2.1 million in the third quarter and first nine months of 2010, respectively, as compared to $572,000 and $1.0 million in the third quarter and first nine months of 2009, respectively.

The Company's net interest margin increased to 2.83% for the nine months ended September 30, 2010, from 2.53% for the nine months ended September 30, 2009, while the third quarter of 2010 saw a net interest margin of 2.90%, an improvement of 31 basis points over the prior year's comparative quarter. The margin improvement was partially caused by a shift in the mix of assets as higher yielding loans replaced maturing investments and lower cost deposits replaced higher-cost wholesale funding.

At September 30, 2010, non-performing loans totaled $4.3 million or 0.80% of total loans as compared to $6.0 million and 1.12%, respectively, as of December 31, 2009, and $6.1 million and 1.12%, respectively, as of June 30, 2010. Other real estate owned totaled $2.4 million as of September 30, 2010, and $0 at June 30, 2010. At September 30, 2010, one non-performing loan for $387,000 is protected by a guaranty by the SBA. The Company experienced further strains in its residential mortgage portfolio, with several additional loans past due as of September 30, 2010. Total loan delinquencies under 90 days at September 30, 2010 amounted to $3.9 million, as compared to $5.7 million at December 31, 2009 and $4.6 million as of June 30, 2010.

The allowance for loan losses in total and as a proportion of total loans as of September 30, 2010, equaled $7.1 million and 1.31%, respectively, as compared to $7.2 million and 1.34%, respectively, as of December 31, 2009. The Company recorded a provision for loan losses of $2.2 million in the first nine months of 2010 as compared to $1.1 million in the first nine months of 2009. The increase in the provision for loan losses in 2010 is due to the higher level of charge-offs. The Company recorded charge-offs of $1.2 million in the first nine months of 2010 on one commercial construction loan that is currently included in other real estate owned at September 30, 2010. Annualized net loan charge-offs as a percentage of average loans totaled 84 basis points for the quarter ended September 30, 2010, as compared to 13 basis points in the comparable period in 2009.

The Company also announced today a quarterly cash dividend of $0.09 per share to be paid on November 18, 2010, to shareholders of record as of November 4, 2010, if, as LSB expects, the merger closes after November 4, 2010. Under the terms of the merger agreement, in addition to the merger consideration of $21.00 per share, People's United has agreed to pay or cause to be paid any regular quarterly dividend declared but unpaid as of the closing date of the merger, with respect to each share of LSB common stock issued and outstanding on the record date for such dividend, and an amount per share of LSB common stock equal to the product of $0.001 multiplied by the number of days from but not including the record date for the most recent regular quarterly dividend declared and paid prior to the closing date of the merger through and including such closing date.

Press releases and SEC filings can be viewed on our website www.RiverBk.com under the "About Us" tab.

LSB Corporation is a Massachusetts corporation that conducts all of its operations through its sole subsidiary, River Bank (the "Bank"). The Bank offers a range of commercial and consumer loan and deposit products and is headquartered at 30 Massachusetts Avenue, North Andover, Massachusetts, approximately 25 miles north of Boston. River Bank operates 5 full-service banking offices in Massachusetts in Andover, Lawrence, Methuen (2) and North Andover and 2 full-service banking offices in New Hampshire in Derry and Salem.

The reader is cautioned that this press release may contain certain statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are expressions of management's expectations as of the date of this press release regarding future events or trends and which do not relate to historical matters. Forward-looking statements include, but are not limited to, statements concerning LSB Corporation's belief, expectations or intentions concerning LSB Corporation's future performance and the likelihood that the acquisition of LSB Corporation by People's United Financial, Inc. (the "Acquisition") will in fact occur in a timely manner. Such expectations may or may not be realized, depending on a number of variable factors, including but not limited to, changes in interest rates, changes in real estate valuations, general economic conditions (either nationally or regionally), regulatory considerations, competition, obtaining regulatory approvals related to the Acquisition in a timely fasion, obtaining the timely approval of LSB Corporation's shareholders for the Acquisition, absence of a material adverse effect on LSB Corporation, satisfaction of other conditions to the Acquisition and timely closing of the Acquisition by both parties to the Acquisition. For more information about these factors, please see our recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q on file with the SEC, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." As a result of such risk factors and uncertainties, the Company's actual results may differ materially from such forward-looking statements. The Company does not undertake and specifically disclaims any obligation to publicly release updates or revisions to any such forward-looking statements as a result of new information, future events or otherwise.

                           LSB Corporation
                       Select Financial Data
                            (unaudited)
           (Dollars in thousands, except per share data)

                                Three months ended       Nine months ended
                           ----------------------------  -----------------

(For the periods ended)    09/30/10  06/30/10  09/30/09  09/30/10 09/30/09
                           --------  --------  --------  -------- --------
Performance ratios
 (annualized):
Efficiency ratio              68.88%    58.38%    58.70%    62.53%   65.02%
Return on average assets       0.57%     0.80%     0.78%     0.71%    0.61%
Return on average
 stockholders equity           7.05%    10.26%     8.31%     9.14%    6.55%
Net interest margin            2.90%     2.90%     2.59%     2.83%    2.53%
Interest rate spread (int.
 bearing only)                 2.66%     2.67%     2.26%     2.59%    2.19%
Dividends paid per share
 (not annualized)           $  0.09   $  0.09   $  0.05   $  0.25  $  0.25


(At)                                           09/30/10  12/31/09 09/30/09
                                               --------  -------- --------
                           "Well Capitalized"
                                Minimums

Capital Ratios:
Stockholders' equity to
 total assets                     N/A              8.20%     7.41%    9.46%
RiverBank Tier 1 leverage
 ratio                            5.0%             7.42%     6.85%    8.17%


Risk-Based Capital Ratio:
LSB Corporation Tier 1
 risk-based                       6.0%            10.48%     9.74%   12.64%
RiverBank Tier 1 risk-based       6.0%            10.23%     9.57%   11.54%
RiverBank total risk-based       10.0%            12.53%    11.84%   12.72%

Asset Quality:
Non-performing loans                             $4,293    $6,003   $3,548
Non-performing assets                             6,725     6,003    3,668
Delinquent loans past due
 30-89 days                                       3,930     5,723    5,723
Net charge-offs (quarterly)                       1,142         8      163

Allowance for loan losses as a percent of
 total loans                                       1.31%     1.34%    1.28%
Allowance as a percent of non-performing
 loans                                           164.80%   119.41%  187.03%
Non-performing loans as a percent of
 total loans                                       0.80%     1.12%    0.68%
Non-performing assets as a percent of
 total assets                                      0.86%     0.74%    0.45%
Net charge-offs to average loans
 (quarterly, annualized)                           0.84%     0.01%    0.13%
Net charge-offs to average loans
 (year-to-date, annualized)                        0.55%     0.10%    0.10%

Per Share Data:
Book value per share (excluding CPP)             $14.20    $13.43   $13.64
Tangible book value per share (excluding CPP)    $13.27     12.57    12.46




                              LSB CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEET
                              (In thousands)
                               (unaudited)

(At)                     09/30/10      06/30/10     12/31/09     09/30/09
                         --------      --------     --------     --------
Retail loans             $164,144      $163,865     $159,101     $156,855
Corporate loans           375,106       378,648      377,518      361,587
                         --------      --------     --------     --------
Total loans               539,250       542,513      536,619      518,442
                         --------      --------     --------     --------
Allowance for loan
 losses                    (7,075)       (7,467)      (7,168)      (6,636)
                         --------      --------     --------     --------
Investments available
 for sale                 170,954       202,270      230,533      240,341
FHLB stock                 11,825        11,825       11,825       11,825
                         --------      --------     --------     --------
Total investments         182,779       214,095      242,358      252,166
                         --------      --------     --------     --------
Federal funds sold         24,619        10,222        6,597       10,218
Other assets               40,779        37,554       38,192       32,763
                         --------      --------     --------     --------
Total assets             $780,352      $796,917     $816,598     $806,953
                         ========      ========     ========     ========
Core deposits            $262,683      $273,805     $252,389     $232,255
Retail term deposits      197,510       198,331      211,061      209,752
Brokered term deposits     14,950        20,411       29,344       29,344
                         --------      --------     --------     --------
Total deposits            475,143       492,547      492,794      471,351
                         --------      --------     --------     --------
Borrowed funds            235,577       236,098      259,082      254,815
Other liabilities           5,622         4,185        4,202        4,427
                         --------      --------     --------     --------
Total liabilities         716,342       732,830      756,078      730,593
                         --------      --------     --------     --------
Total stockholders'
 equity                    64,010        64,087       60,520       76,360
                         --------      --------     --------     --------
Total liabilities and
 stockholders' equity    $780,352      $796,917     $816,598     $806,953
                         ========      ========     ========     ========


                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (Dollars in thousands, except per share data)

                                 (unaudited)
                              Three months ended      Nine months ended
                          -------------------------------------------------
(For the periods ended)   09/30/10  06/30/10  09/30/09   09/30/10  09/30/09
                          --------  --------  --------   --------  --------
Interest income           $  9,786  $  9,979  $ 10,268   $ 29,858  $ 30,400
Interest expense             4,226     4,374     5,226     13,458    16,058
                          --------  --------  --------   --------  --------
Net interest income          5,560     5,605     5,042     16,400    14,342
Provision for loan losses      750       700       400      2,150     1,100
                          --------  --------  --------   --------  --------
Net interest income after 
 provision for loan losses   4,810     4,905     4,642     14,250    13,242
Gain on sales of investments   688       679       572      2,064     1,030
Prepayment penalty on FHLB
 advances                       --        --        --       (149)       --
Other non-interest income      574       559       524      1,677     1,571
Salary & employee benefits
 expense                     2,097     1,929     1,643      5,842     5,013
FDIC deposit insurance
 premium                       201       200       262        612     1,022
Other non-interest expense   1,927     1,469     1,362      4,850     4,311
                          --------  --------  --------   --------  --------
 Total non-interest
  expense                    4,225     3,598     3,267     11,304    10,346
                          --------  --------  --------   --------  --------
Net income before income
 taxes                       1,847     2,545     2,471      6,538     5,497
Income tax expense             708       946       910      2,254     1,911
                          --------  --------  --------   --------  --------
Net income before preferred
 stock dividends and
 accretion                   1,139     1,599     1,561      4,284     3,586
Preferred stock dividends
 and accretion                  --        --      (215)        --     (588)
                          --------  --------  --------   --------  --------
Net income available to
 common shareholders      $  1,139  $  1,599  $  1,346   $  4,284  $  2,998
                          ========  ========  ========   ========  ========

Basic earnings per common
 share                    $   0.25  $   0.35  $   0.30   $   0.95  $   0.66
Diluted earnings per
 common share             $   0.25  $   0.35  $   0.30   $   0.95  $   0.66
End of period common
 shares outstanding      4,506,686 4,506,686 4,499,936  4,506,686 4,499,936
Weighted average common
 shares outstanding:
Basic                    4,506,686 4,506,686 4,495,356  4,506,686 4,479,316
Diluted                  4,548,788 4,510,224 4,496,680  4,522,539 4,480,347

Contact Information

  • CONTACT:
    Gerald T. Mulligan
    President & CEO
    (978) 725-7555